Five IRS managers have been replaced, from the previous acting commissioner whom Werfel succeeded to the head of the unit based in Cincinnati that handles tax-exempt applications.
In addition, Werfel created an Accountability Review Board to recommend within 60 days "any additional personnel actions necessary to hold accountable those responsible" for the targeting disclosed by the inspector general's report.
White House spokesman Jay Carney said Monday that Obama believes Werfel's report "is an important step in ensuring accountability for any staff that acted inappropriately, identifies the failures in their systems that allowed the misconduct to happen, and takes a forward-looking systemic view at the agency's management."
In his audit that disclosed the misconduct, George said there was no evidence of a political motive. However, he is continuing to investigate the matter, along with the FBI and the congressional committees.
As part of his review, Werfel said 80 groups awaiting IRS action on their applications for tax exempt status for more than 120 days could self-register with the agency as long as they certified under penalty of perjury that they would comply with applicable laws and regulations.
At the heart of the matter is what kind of organization can qualify for tax-exempt status. Regulations limit such status to groups primarily involved in social welfare activities, while political groups are considered ineligible.
Confusion over defining what constitutes political activity versus social welfare activity contributed to the targeting by the IRS, Werfel said.
An IRS statement on Monday said the "safe-harbor" option for self-certification would apply to groups that "certify they devote 60% or more of both their spending and time on activities that promote social welfare."
"At the same time, they must certify that political campaign intervention involves 40% or less of both their spending and time," the statement said. Applicants meeting those thresholds would get approval within two weeks of seeking self-certification, it said.
Werfel said the IRS would continue checking on tax-exempt groups to ensure they were following the law.
Separately, the House Oversight Committee, which has been aggressively investigating the IRS matter, plans to meet on Friday to consider a resolution aimed at resolving questions about whether a key agency official must testify.
Lois Lerner was the director of exempt organizations when the agency filtered applications for tax exempt status. She appeared before the committee in May and said she had broken no laws or regulations and then invoked her constitutional right not to answer questions.
Several committee Republicans questioned whether she waived that right by making her opening statement, and Oversight Chairman Darrell Issa said she could be called back at a later date if that were the case.